Anyone who has visited a grocery store over the past few weeks knows the coronavirus crisis has become an unprecedented challenge for food retailers.
Consumers, fearing they might face lockdown orders at any time, have been stocking up on essentials at a time when retailers face supply chain disruptions—the result: empty shelves. And as the COVID-19 crisis continues, the ritual of grocery shopping is changing. An increasing number of consumers are turning to delivery, curbside and buy online pick up at store (BOPIS) options to meet their needs during a time of social distancing.
According to data from Rakuten Intelligence, online order volume from full-assortment grocery merchants rose substantially from March 12 through March 15, compared with the same period a year earlier. Rakuten Intelligence tracks emailed customer receipts to collect and catalog item-level purchase details from a panel made up of millions of shoppers.
The dollar value of orders from full-assortment grocery merchants during those four days—BOPIS and delivery—was up 210.1%, while the number of orders grew 151.1%. For the period of Jan. 1 through March 15, sales increased 61.3% and the number of orders rose 57.6%, compared with the year-ago period. Merchants in this category include the Amazon Fresh service operated by Amazon.com Inc. (No. 1 in the 2019 Digital Commerce 360 Top 1000, grocery delivery company Instacart Inc., the Walmart To Go service run by Walmart Inc, (N.o 3), Kroger Co. and others.
The dollar volume of BOPIS orders of all kinds (grocery and non-grocery) grew 111% from March 12 through March 15, compared with last year, according to Rakuten. The number of orders grew by 82.8%. For the period of Jan. 1 through March 15, those numbers were 38.9% and 39%, respectively.
The data indicates online grocery and overall BOPIS purchases might have peaked on Friday, March 13 and slowed over the weekend. According to Rakuten Intelligence data for March 12 and March 13 only, online sales at full-assortment grocers grew 325.9% and orders rose 219%. For BOPIS orders as a whole, sales were up 183.7% and orders grew 126.3% over those two days, Rakuten Intelligence found.
The increase in BOPIS and sales from full-assortment grocery merchants far exceeded those experienced by e-retailers overall. For March 12 through March 15, ecommerce sales for all retailers grew 35.3% and orders were up 33.4% compared with last year, according to Rakuten. For the period of Jan. 1 through March 15, dollar volumes for all ecommerce retailers grew 18.2%, the number of orders rose 16.9%.
The longer-term impact of the coronavirus for ecommerce
Minney says the COVID-19-related spike in online grocery sales is introducing a lot of new shoppers to capabilities they might never have tried before. That could have a lasting impact, assuming consumers view their experiences as positive, she says. How many consumers stick with online shopping depends in part on how understanding consumers are about supply chain disruptions that could affect what they can get and how quickly their orders arrive, she says.
Amish Jani, a partner in venture capital firm FirstMark Capital LLC., agrees the COVID-19 crisis could have lasting effects in retailing. In the long term, online shopping will get a boost from the lifestyle changes of COVID-19 consumers, Jani says. He says the COVID-19 crisis “will be a net positive for all digital commerce, especially grocery and household supplies and things like that. You’ll see a bump from this, and that behavior will persist going forward.”
People who start using online grocery delivery services like Amazon Fresh or buying meal kits from companies like FreshDirect LLC (No. 91) or Blue Apron (No. 98) might find they like the experience and stick with those habits after the crisis has passed, Jani says.
“This is a forced way to re-train a broad swath of consumers,” Jani says. “You’re certainly going to come out not worse off in terms of digital sophistication, and there’s an argument to be made that people will be more familiar with ways to get things delivered to their doorsteps without going out.”
Walmart could gain ‘share of stomach’
As online grocery shopping goes mainstream, Walmart will be the primary beneficiary, analysts say.
One-third of shoppers surveyed by Gordon Haskett Research Advisors on March 13 said they bought food online over the past week, and of those, 41% were doing so for the first time. For those newbies, Walmart was by far the most popular option, capturing more than half of orders. Amazon and its Whole Foods chain garnered only 14%.
Walmart’s online grocery business has already been a source of increased sales, if not profit, for the retail giant. Recently, Walmart reported it increased online sales 37% for its fiscal year 2020, which ended Jan. 31, and 35% for the fourth quarter, the company says. Strong growth in groceries sold online —for pickup and delivery—significantly boosted those totals.
Walmart reported its ecommerce business during the vital fourth quarter, “had strong growth in grocery pickup and delivery, and Walmart.com had its highest quarterly growth rate of the year,” but did not provide dollar amounts.
“As more people stay at home to work, with kids to take care of, having groceries delivered becomes a lifesaver,” said Juozas Kaziukenas, founder of ecommerce researcher Marketplace Pulse. “Walmart is uniquely positioned to enable that.”
With restaurants across the nation now closing their doors, more meals will be eaten at home, further increasing Walmart’s “share of stomach,” according to UBS analyst Michael Lasser.
Other analysts agree: Credit Suisse AG’s Seth Sigman said Wednesday that Walmart enters this uncertain period in a position of strength, thanks to investments in its online pickup service, along with technology and infrastructure improvements. Morgan Stanley’s Simeon Gutman, meanwhile, says Walmart is “a clear winner” while other retailers close stores and furlough employees. He now forecasts Walmart’s same-store sales to increase 3% this year, up from a previous estimate of 0.5%.
Bloomberg News and Don Davis contributed to this report.